Netflix gives in to advertising: will its new price with advertisements at less than 8 euros be successful? | Economy

Netflix logo on a mobile screen.
Netflix logo on a mobile screen. Reuters

Netflix is ​​rinding al low cost. your subscribers prime they are not growing at the rate the series and movie platform needs to meet its financial goals. They even decreased in the last quarter. So you had no choice but to choose to target a less exclusive audience: they will pay less for the subscription but in exchange for supporting advertisements. The production company announced last Wednesday an alliance with Microsoft to offer a new subscription service at a lower price than the three it currently sells provided that the content displays advertising. That is to say, in the most intriguing moments of a series or a film, a place, as is already the case with services as popular as YouTube videos or Spotify music, which also have versions prime no ads.

The new rate with advertisements must be lower than the base rate, that is to say less than 8 euros, and would be ready throughout 2023, although the company has not set a deadline. The New York Times He even mentions that it could be brought forward to the end of 2022, if the decline in subscribers continues. Netflix currently markets three prices in Spain: basic (7.99 euros), standard (12.99 euros) and premium (14.99 euros).

The company already announced to its shareholders in April that it was willing to explore the option with announcements after the disappointing results of the first quarter of 2022, during which it lost 200,000 subscribersthe first time I’ve seen a drop in subscribers since 2011. A few numbers that have alarmed investors: the firm has lost 70% of its stock market value so far this year.

However, he attributed this fall to the “solidarity” of his subscribers who shared the password: out of his 221.6 million subscribers, there are 100 million households who use his service and do not pay for it. It was about finding a formula to convert these viewers into new subscribers. To do this, the company has implemented two new supplement options on a trial basis in Chile, Costa Rica and Peru: add subsidiary accounts for up to two people they do not live with and transfer the profile to a new account. But it seems that the pilot experiment did not have the expected success. In Spain, the platform has already tried to put an end to this practice and when it detects that an account is accessible from outside the home, it can ask the user to enter a verification code to approve the connection.

Agreement with Microsoft

Now he embraces the model with advertising, entrusting Microsoft with its management, against the options of Google and NBC, which have been given to him as favorites to associate in this new stage of Netflix. “Microsoft has the proven ability to meet all of our advertising needs as we work together to create a new ad-supported offering,” Netflx said in a statement.

The deal is exclusive, as the Bill Gates-founded company pointed out: “Sellers who turn to Microsoft for their advertising needs will have access to Netflix’s premium smart TV audience and inventory.” All commercials seen on Netflix “will be available exclusively through the Microsoft platform,” the Redmond-based IT giant said in a statement.

The hybrid payment and advertising model is not new for series and film platforms. Hulu and HBO Max already have a mode with ads, and Disney+ is about to release it. Models vary. Warner Bros. Discovery’s HBO Max offers four commercials per hour for $9.99, or $14.99 ad-free. Customers of Hulu, of which Disney is the largest shareholder, pay $6.99 and must watch up to 12 ads per hour. The experience prime it costs $12.99. Disney+ has announced that it will limit advertising to four minutes per hour of broadcast, and will free children from it if they enter via their profile.

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